Post-open Review

Narrowly ranging open finally breaks higher.

Rallying up to 2821.50 opened only 2 points lower and ranged narrowly, choppily sideways through the first half-hour. Longer, even. The range was persisting at 10:15, away from either bias signal, triggering no-bias.

Then the opening range’s upper-end broke higher to 2825.50. That probed the 2823.25 bias-up signal. But it was too late to trigger, or to invoke the grace period. Exceeding 2823.25 at 10:30 would have invalidated no-bias, but it wasn’t, and it didn’t.

Probing above 2823.25 this morning is no-bias trending that will require being retraced entirely. Exiting the bias environment above its 2831.00 bias-up target would excuse the retrace requirement.

Good luck finding sponsorship. It’s not impossible, but trending higher probably needs a catalyst like a headline. Meanwhile, trending higher will be difficult amid anxiousness ahead of this afternoon’s FOMC policy statement, and through resistance at yesterday’s high.

Back under 2820.75 would start to signal a deeper pullback under, with plenty of room to expend selling pressure before it starts damaging the bottoming potential.

The “session-long rally” had rendered itself improbable before the open. Not for lack of proximity, as yesterday afternoon’s 2811.25 high had been tested, retested, re-retested, only to react back down to 2806.50. But greeting the open 3 points under 2811.25 without yet probing above it did not fulfill the spirit of rejecting yesterday’s late dip.

That’s too simple, so a headline entered the picture.

Spiking up to attack 2819.00 did create a gap up above 2811.25. But it had already become too late for new sponsorship to be considered as rejecting yesterday’s late decline. The headline (China trade talks resumption) was the spike’s catalyst, and its origin was likely to be retraced at some point.

Ultimately, 2811.25 maintained its recovery through the opening 15 minutes of volatility, but price did not trend up. The session-long rally setup was officially moot. The 2814.25 bias-up target was being tested at 10:15 to avoid renewing the bias-up signal. And the 2808.50 bias-up signal was eventually retraced.

There is no unfinished business or other attraction in-play for the duration of the bias environment. Its exit may be another story. Session-long rally is moot, but an upleg can still be launched. Similarly, breaking under 2808.50 as the bias environment lapses could probe under 2801.50, and lower.

Is the recovery rolling over, or is its latest pullback ready to recover?

Extending down this morning was likely at some point to visit 2801.50. It was tested and retested at the noon hour’s 2798.25 lows. Its reaction up didn’t avoid triggering this afternoon’s 2807.00 bias-down signal.

This being a bias-down environment hasn’t prevented bouncing to probe 2810.00. This being a bias-down environment, a retracement to at least 2807.00 will be required at or after the bias environment begins lapsing.

Extending this morning’s decline was no doubt a function of the FAANGS resuming their slides. And broadening out, as well. Recall my comments beginning with last week’s NFLX reaction, up to this weekend’s Saturday Review note: Their sponsorship is holding, not buying.

But the rest of FAANGs story is that rotation out of their leadership and into laggards often defines the market’s next upleg. Regardless of whether 2807.00 is retraced — and preferably it will be retraced — the slide into and out of the weekend has an opportunity to seal a bottom for that next upleg. Otherwise, back under 2805.00 could launch another downleg.

Very late surge proves too late to maintain.

In the Market Tour I described the potential paths higher for having recovered tests of both bias parameters overnight. The paths higher differed in whether the open would be greeted in positive territory.

Which it was not. It was already too late to expect the 2824.25 bias-up signal to trigger, if tested. Which it was not.

Recovering only to Friday’s 2817.50 cash session close, and then surging just several minutes before the open, only attacked 2822.00. That stretched the rubber band enough to probe the 2815.00 bias-down signal to 2810.50. But 2815.00 was touched in time to invoke the grace period.

2815.00 was recovered by a single tick at 10:30 to trigger late no-bias. Another tick lower would have triggered noN-bias, not bias-down. Nevertheless, being on the borderline, dipping back under 2813.00 is getting a benefit of the doubt. In fact, its 2809.00 bias-down target was just touched.

Extending lower would next target 2801.50. Having touched the bias-down target after a very choppy open, back above 2815.75 would start to signal momentum reversing up.

REMINDER: MARKET WRAP IS ONE HOUR EARLY TODAY.

Trending up relentlessly overnight had tested yesterday’s 2846.50 high. There was no assurance that reinforcements would carry the trend higher post-open, but I would be reluctant to short before neutralizing the unfinished business above at 2848.75.

After the GDP reaction’s dip to 2839.00, no new sponsorship made its retest likely. Holding its retest would have potential back up to 2848.75.

Neither path higher formed. The dip to 2839.00 developed as was expected, but only to form a Descending Triangle that broke lower. Testing the 2836.50 bias-down signal at 10:15 and 10:30 has triggered noN-bias. The 2829.50 bias-down target is still an attraction, but doesn’t require being tested or held. Now it’s being attacked to within 2 points.

Recovering 2837.25 through a relevant window like the bias environment exit would start to signal this morning’s drop had ended. The vacuum back up to yesterday’s and overnight highs wouldn’t need any new sponsorship to rally — diminished selling would be enough.